Virtual Schoolbag (VSB)

Business managers, bursars and secretaries, governors, headteachers of all schools

Type

For information

Purpose

Information

Deadline

NA

VSB number

2018/225

Title

ESCC Schools Funding Formula Update

Summary text

The Funding Formula Working Group is developing proposals to make changes to East Sussex funding formula for 2019/20. The overriding aim of the group is to enable a smooth transition towards the National Funding Formula that is due to be introduced in 2020/21. The group are considering changes to the lump sum, the deprivation factors and the sparsity factor to further this aim. Final proposals will be presented to Schools Forum in September and will be issued to all schools and academies for consultation during October, after final guidance is received from the DfE.

Please read the attached document which explains the current progress and proposed timelines for finalisation of the 2019/20 funding formula.

Please keep alert for further updates during September and October. Updates and important information will be issued via the VSB and consultation information will be sent directly to schools. The consultation will be your opportunity to share your views on the proposals so we encourage all schools and academies to respond when the consultation is distributed in October.

Main text

Introduction

Work is currently ongoing to collate proposals for the Funding Formula that will be used by East Sussex to allocate funding to schools for 2019/20. We are currently in a transition period towards the National Funding Formula (NFF) which is due to be introduced for the financial year 2020/21.

The NFF will allocate funding to schools using the same rates applied to the standard formula factors across schools nationally. Currently, the amount of funding the local authority receives is based on these rates, however for 2018/19 and 2019/20, Local Authorities can still apply a local formula to distribute funding to individual schools to aid the transition towards the NFF.

East Sussex works each year with schools and Schools Forum to agree the local formula to ensure funding is apportioned as appropriately and effectively as possible for the schools and academies in East Sussex. In order to review the funding factors for 2019/20, the Funding Formula Working Group (FFWG) has reconvened. The FFWG is comprised of School representatives (Primary and Secondary Phase) and Local Authority officers.

This document outlines the progress of the working group to date and the proposed timeline for further action throughout 2018/19 in the lead up to agreement of the 2019/20 funding.

Principles, Process and Areas of Review

The first meeting of the FFWG took place on 18th May at which the aims and objectives of the group were confirmed and the principles that were being worked to clarified. The group took the same view as the previous year: to continue to take further steps towards NFF rates in all of the funding factors for 2019/20, and this to be done in a way that avoids any undue turbulence to schools and academies.

Assumptions made at the initial meeting were that:

funding would be provided by the DfE in 2019/20 in line with that already indicated by DfE exemplifications distributed in 2017/18; and

the Minimum Funding Guarantee (MFG) and Capping rules that the DfE set in 2018/19 will continue into 2019/20 - i.e. maximum protection against per pupil funding loss is allowable and there would be flexibility around the % gains in per pupil funding.

Final confirmation of these factors will not be received until the end of July from the DfE. On this basis the group requested a number of scenarios to be produced showing the impact on all schools individually.

The areas being reviewed include the lump sum, the deprivation factors and the sparsity factor.

Lump Sum

Currently the East Sussex funding formula includes a lump sum for primary schools of £122,000 and £117,000 for secondary schools. Both amounts were subject to reduction in constructing the formula for 2018/19. The NFF lump sum is £110,000 across both phases, therefore the group have looked at scenario models including a further reduction in lump sum. The scenarios have included reducing the Primary lump sum by £2,000, £6,000 or (to reach the NFF rate) £12,000 and the Secondary lump sum by £7,000 (to reach the NFF rate).

Deprivation

The ESCC funding formula uses the Free School Meal (FSM) eligibility factor only to allocate funding to deprivation. However, under the NFF, three deprivation factors will be used FSM, FSMEver6 and IDACI. The group have reviewed scenarios that include all three deprivation factors. The scenarios have included moving directly to the NFF deprivation rates or moving to 50% of the new factor rates.

Sparsity

The Sparsity factor enables greater financial support to some of the smaller schools in locations where sparsity is an issue (i.e. children attending the school would have to travel long distances to attend the next nearest school). Sparsity is currently recognised in the East Sussex formula with a flat rate payment of £5,000 to schools that qualify under the criteria. The NFF introduces a different calculation. The group have looked at scenarios including a tapered approach to sparsity calculation and the sparsity calculation included in the NFF. Under the NFF, a school could receive up to £25,000 (Primary Phase) and up to £65,000 for the Secondary Phase.

Current Proposals

The second FFWG meeting took place on 8th June. All of the proposals were looked at in turn and the impact that they would have on all schools and academies considered. It was agreed at that point, assuming no change to the MFG regulations, the aim will be to continue with at least the 100% MFG which will ensure turbulence is minimised and schools are protected where budgets would otherwise reduce if we were to move to the NFF.

After the initial review further scenarios were modelled and discussed at a further meeting on 6th July.

Final decisions and proposals cannot be confirmed until further information is received from the DfE regarding funding and operational guidance, but as a result of the extensive modelling and review the group are currently assessing the following potential changes:

A step reduction in the primary lump sum, to move towards the NFF rate.

A reduction in the secondary lump sum of £7,000 to reach the NFF rate of £110,000.

To adjust Deprivation factors to the NFF rates (dependent on final funding confirmation).

To introduce the sparsity factor as per the NFF calculation.

MFG to be set to at least 100% (100.5% will also be modelled).

Capping percentage to be maximized dependent on overall funding levels.

Final models and exemplifications will be fully reviewed by the group early in September once final information regarding funding and operational guidance is received from the DfE.

Important Note on Funding Allocations

Please be aware that all funding received under the schools block of the Dedicated Schools Grant by East Sussex is passed on to schools and academies. The vast majority of this is allocated by the local funding formula. The only amount that does not get allocated via the formula is the amounts set aside to support the growth and falling rolls funds. These funds are allocated to schools and academies that fulfil the relevant criteria and these funds are explicitly agreed by Schools Forum.

It is possible that the DfE may issue individual school exemplifications to demonstrate the amount schools would receive in 2019/20 if the NFF were introduced without transitional protections and removing the effect of any elements in the local formula that are different to the NFF. Please treat the DfE exemplifications with caution they are designed to demonstrate the longer term impact of the NFF and will not necessarily give an accurate indication of the amount the school will actually receive for 2019/20. The local formula will still determine how the total amount of funding is allocated to schools and academies in 2019/20, this does not affect the amount of funding that is allocated overall to schools and academies in East Sussex, just the way it is allocated to individual institutions. This will inevitably include a different split in funding. In addition the protection and capping provisions in place to ensure stability in funding will limit the full impact of certain changes.

Moving Forward and Proposed Timeline

Once the FFWG have reviewed and agreed the proposed changes in early September 2018, the proposals will be presented to Schools Forum for agreement at the September Schools Forum meeting (28th September) for discussion. With agreement from Schools Forum, these proposals will then be sent, with individual exemplifications, to all schools and academies for consultation during October. All schools and academies will have the opportunity to respond and express their views on the proposed formula changes at that point.

The results of the consultation will then be brought to the November Schools forum meeting.

For full detail of all discussions to date please refer to the Funding Formula Working Group Minutes that are available on the ESCC website.